Time to Pay VAT & PAYE
If your business has VAT, PAYE or corporation tax arrears, you may be able to negotiate a Time To Pay (TTP) arrangement with HM Revenue and Customs.
A Time to Pay arrangement is an agreement between your business and HMRC that allows you to pay off your tax debts in monthly instalments. This can give your business financial “breathing room” if you’re currently affected by slow cash flow or other common financial issues.
If your business has tax arrears and you believe that a Time to Pay arrangement may be a good option, contact us. Our team has extensive experience negotiating with HMRC and can help you to learn more about the best solutions for your business.
Below, we’ve provided more information about how Time to Pay arrangements work and the key requirements for our business to be eligible for a TTP. We’ve also provided more information on what you can do if your business has VAT, PAYE or other tax arrears and needs help.
Time to Pay Arrangement: The Basics
HMRC is the most common business creditor in the UK. When your business runs into financial issues, it’s common to fall behind on your tax payments, including important taxes such as VAT and PAYE.
If your business fails to pay its tax bill on time, HMRC will often take swift action. Your business may receive one or several demand letters from HMRC notifying you that you have an overdue tax bill. If you have significant tax arrears, you may even be visited by an HMRC officer.
If you fail to pay your tax bills even after receiving correspondence from HMRC, you could face legal action, including efforts to liquidate your business.
A Time to Pay arrangement is an agreement negotiated between your business and HMRC that allows you to pay your tax arrears over time, typically as a monthly instalment payment, instead of as a lump sum.
Most Time to Pay arrangements last for 12 months or less. In some circumstances, HMRC may allow you to pay your tax arrears over a longer time period.
Is Your Business Eligible for a Time to Pay Arrangement?
Not all businesses can successfully enter into a Time to Pay arrangement with HMRC. In most cases, HMRC will only agree to enter into a Time to Pay arrangement if your business is:
- Able to clearly explain why it’s unable to pay its VAT, PAYE, corporation tax and/or any other tax arrears.
- Able to show that it is financially viable and capable of complying with the terms of the Time to Pay arrangement by making regular payments.
If you believe that your business meets the above criteria, or simply want to know more about the Time to Pay arrangement process, please contact us. Our experienced team can provide personalised advice and assist you with the process of negotiating a TTP arrangement.
To negotiate a Time to Pay arrangement, it’s best to contact HMRC as soon as you are aware that your business is unable to pay its tax arrears.
You’ll typically be required to provide information proving the above to HMRC. You may need to provide copies of your business’s cash flow and other relevant information. We can assist in this process and negotiate with HMRC on your business’s behalf.
Advantages of a Time to Pay Arrangement
The biggest advantage of a Time to Pay arrangement is that it gives your business more time to pay VAT, PAYE and other tax arrears. If your business is struggling due to affected cash flow or another type of disruption, a TTP arrangement can significantly ease its financial pressure.
If your business is insolvent due to tax arrears but financially viable, negotiating a Time to Pay arrangement can help your business avoid entering into administration, liquidation or any other insolvency procedure.
Negotiating and entering into a Time to Pay arrangement can also help your business avoid any additional late payment fees from HMRC.
Disadvantages of a Time to Pay Arrangement
Unlike certain insolvency agreements, entering into a Time to Pay arrangement doesn’t mean you’ll be able to write off some of your tax arrears. You’ll still need to pay the entire amount in full, albeit via a monthly instalment rather than as a lump sum payment.
Throughout the duration of the agreement, your outstanding tax arrears will still be subject to interest. This can add a small amount to your total balance over the course of the repayment period.
What if a Time to Pay Arrangement isn’t Possible?
HMRC don’t always agree to Time to Pay arrangement proposals. If your business isn’t viable, your proposal is unrealistic or HMRC has any other reason to doubt that your business is able to comply with its agreement, it may reject your Time to Pay proposal.
If your business proposes a Time to Pay arrangement and is rejected, there are several other options that you may be able to take advantage of:
- Emergency financing. Your business may be able to use financing solutions such as invoice discounting, invoice factoring or turnaround finance to rapidly raise funds and pay HMRC.
- Entering into administration. Entering into administration will protect your business against legal action from its creditors, including HMRC, while a licensed insolvency practitioner is appointed as its administrator during insolvency.
- Proposing a CVA. Proposing a CVA will also protect your business against legal action from creditors, including a winding-up petition. If your CVA proposal is successful, your business may be able to write off some of its debts.
- Voluntary liquidation. If your business has significant debts to HMRC and is no longer viable, entering into liquidation voluntarily allows you to close the business and liquidate its assets in order to pay creditors.
Talk to Our Experts
If your business has VAT, PAYE or corporation tax arrears and is under pressure from HMRC to pay, it’s important to take action as quickly as possible.
HMRC is the UK’s most common business creditor. They are swift to take action and may seize your business’s equipment, impose fines and even take legal action to wind up your business if you fail to respond to enforcement action.
As specialists in insolvency and business recovery, we’ve helped hundreds of UK businesses in a range of industries negotiate Time to Pay (TTP) arrangements with HMRC. Our team can help you to negotiate with HMRC and propose a Time to Pay arrangement on your behalf. To discuss your business’s situation and learn more about what you can do, contact us now on 0161 8719 842 or send us an email to schedule your free private consultation.